ISLAMABAD: New private sector firms seeking entrance into the market of liquefied natural gas (LNG) without government promises seemed to be going in circles as players in the public sector blamed each other for environmental and infrastructure uncertainty.
That was the overarching meaning of a public hearing held at the behest of Tabeer Energy and Energas by the Oil & Gas Regulatory Authority (Ogra) for marketing licences for the selling of LNG. Both applicants said they had their own private sector clients and would arrange LNG imports without any obligation to the government by the use of gas utility pipeline networks.
Muhammad Arif, Ogra Member Gas, asked Tabeer if it had a capacity allocation for the LNG terminal and gas pipeline network so that it could supply its customers with gas and when imports could begin.
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Ansar Khan of Tabeer said that his company had obtained the permission, land allocation and related regulatory approvals to set up its own LNG terminal in 2022. It could initially import 200-250 million cubic feet of LNG per day by April 2021 using the terminal facility of government-owned Pakistan LNG Limited (PLL), he added. Khan said it would help the PLL share a portion of its surplus terminal resources and help provide group company customers with cheaper LNG as it would not require any intermediaries.
These included the Fortunate Group, Younas Brothers, Sapphire Group and Halmore, etc., who were not supplied with gas and had to rely on furnace oil to satisfy export orders and domestic demand.
He said the company participated a few months ago in PLL’s bidding for terminal space, but in the absence of a marketing licence, it was not approved. He said a 17-km pipeline from Port Qasim to Pakland Cement had recently been completed by the Sui Southern Gas Company Limited (SSGCL) and the government had issued an assurance that this pipeline would de-bottleneck about 600 mmcfd of additional capacity.
Yousuf Inam of PLL said private sector participation will offer productivity by leveraging unused resources and establishing a competitive market. He reported that Energas was not eligible to engage in an import slot terminal capability offer in November because the company lacked a marketing licence. The tender was later cancelled as power was spent in the public sector, he said.
He said however, both Tabeer and Energas were dependent on current Sui Northern Gas Pipeline Limited (SNGPL) customers rather than on incremental customers, which would affect the business of SNGPL and SSGCL. He said the firm had advertised power, but was unable to grant it because of increasing public sector demand.
Now, he said that the PLL would issue terminal capacity advertisements in February and March so that the private sector could import LNG and that only companies with a marketing licence would be able to participate. He said the LNG marketing firms should also have the dedication of gas utilities to pipeline capability and the regulator should spearhead those clarifications.
On the occasion, Arif noted that the very aim of third-party access to terminal and pipeline capacity was to create competition and support customers and the economy, but challenged Energas to re-examine the complexities around the allocation of terminal and pipeline capacity, as he did not believe that it was feasible to first deliver in April 2021.
Ogra gas participant and PLL officials accused each other for building obstacles to power distribution and marketing licence issuance. However the two parties decided to hold their internal talks on the matter next week in order to provide clarification on legal and regulatory issues.
Rahat Kamal, an intervener, requested clarity with respect to power distribution. He said that Energas had suggested that 250 mmcfd of PLL capacity would be used. Secondly, he claimed that PLL had signed an agreement to supply 150 mmcfd to K-Electric (KE). Therefore, he wondered how realistic it would be.
Pakistan Gas Port delegate Muhammad Kashif said the PLL had capacity for February and March while Energas was preparing to import LNG in April when there would be no spare capacity for the PLL
Representing Mitsubishi, Tabeer Energy Chief Marketing Officer Shigeki Terada praised Pakistan’s government for opening up the private sector LNG market. He said the company had an integrated LNG programme for the non-interrupted delivery of gas to various industries in particular CNG and electricity, which were facing gas shortages and disconnections.
Representatives of Tabeer said they were looking for their terminal to become available in the first quarter of 2023. He said the firm had MoU with world-class terminal providers and signed MoU with SNGPL as well and had SSGCL’s knowledge of working in the gas industry.
In response to a query, Tabeer’s Jawad Majeed claimed that their terminal would be the first fully integrated terminal where the company itself would manage LNG imports, re-gasification and sales and provide the government with significant foreign exchange savings without any off-take guarantees. Regasified liquefied natural gas will be exported by the country, in conjunction with Russia, to consumers using the new North-South pipeline.